Chimeric Therapeutics (ASX: CHM) shares are up 19% on the back of an FDA approval. This might be valid for this specific FDA approval does add value to CHM shares. But we should also note that this is very, very, early days here. This is the start of a likely decade long process to see whether the treatment works. This is not, not at all, the FDA saying that this is now approved and good to go.
The announcement: “Chimeric Therapeutics (ASX:CHM, “Chimeric” or the
“Company”), an Australian leader in cell therapy, announced today that the U.S. Food and Drug Administration (FDA) has cleared the Investigational New Drug (IND) application of CHM 2101, Chimeric’s first in class CDH17 CAR T cell therapy for gastrointestinal cancers.
The company plans to investigate CHM 2101 in a multi center, open label Phase 1A/B clinical trial for patients with advanced Colorectal Cancer, Gastric Cancer and Neuroendocrine Tumours. CHM 2101 is a 3rd generation, novel CDH17 CAR T cell therapy that targets CDH17, a cancer target associated with poor prognosis and metastasis in the most common gastrointestinal tumors including Colorectal Cancer, Gastric Cancer and Neuroendocrine Tumours.”
Now, if the treatment works of course it will be valuable. As we all generally live longer and don’t die of other things the cancer incidence is rising, especially these types of them. So, yes, a treatment would have substantial value.
Chimeric Therapeutics share price from Google Finance
The issue though is how far away is any revenue? As a useful guide, perhaps a decade. For there are three (major) stages to drug testing. Phase I really tries to look at whether the treatment kills people. Phase II is whether it treats anything usefully, Phase III is looking at side effects in a wider population. That’s not an accurate description but it is a useful one. It’s only after Phase III that the FDA will approve a drug or treatment for sale - that is accurate.
So, this is FDA approval not to sell the drug. This is FDA approval to start testing the drug at that Phase Ib level. That is, it’s not as yet known whether the drug even works, let alone is safe in a broader patient population. It’s going to take many years - possibly that full decade - to find out too.
Yes, being able to start testing is value additive for Chimeric. But there’s a long way to go and a lot of uncertainty still.
